Additional Teacher Resource Pack

Transcription

1 Additional Teacher Resource Pack The Credit Crunch Copyright Classroom Video Limited This teacher resource pack is copyright of Classroom Video Limited and may not be amended, reproduced or resold in any way without gaining written permission from Classroom Video Limited

2 Introduction This film looks at the causes of the credit crunch, the business and economic decisions that led to it and the subsequent steps being taken to improve the situation. It also examines the economic theory in a learner friendly way with real life examples. DVD Timeline 00:00:00 Introduction 00:01:33 What is a Credit Crunch? 00:06:50 What causes a Credit Crunch? 00:10:37 The Losers 00:15:25 The Winners 00:18:44 What Happens Next? 00:22:48 Conclusion 00:23:52 Credits 00:24:25 End 2

3 Curriculum Links The topic has links to many syllabuses notably: Every Child Matters Agenda (Economic Understanding) Please note all GCSE spec refs refer to new specs from Sept 09 GCSE Economics (AQA) Unit 12 (Investigating Economic Issues) and Unit 11 (Personal Economics) GCSE Business and Economics (Edexcel) unit 1 (section 5: The wider world affecting Business) and unit 5 GCSE Business (Edexcel) unit 1 (section 5 a/b) GCSE Business (OCR) Unit A293:The External business Environment GCSE Business (WJEC) unit 2.4: The External Environment AS Business (WJEC) Unit 1: Business Framework AS Business/Economics (Edexcel) Unit 2B: Business Economics A2 Business (OCR) unit F297: Strategic Management A2 Business (AQA) Unit4: Assessing the changes in the Business Environment A2 Business (WJEC) Unit 3: Business Decision making and Unit4: Business Strategy and Practice A2 Business/Economics (Edexcel) Unit3: International business and Unit 4B: The Wider Economic Environment of Business Useful Web Resources Related DVDs available from Classroom Video Ltd Rethinking Economic Growth The Global Economics series The Operation of an Economy Please contact customer services on or visit to see our full range of titles and buy online. 3

4 Activities for before Viewing the Programme 1. In groups discuss what you understand by the credit crunch and how you believe your local area has been affected share your findings with the rest of the class. 2. In the computer room research how many businesses in your local area have closed since the credit crunch and how many have started how do these results compare to your discussion groups? 3. As a class, brainstorm who or what you think caused the credit crunch save the results and repeat this after watching the film to see how the results compare. 4

5 Student Worksheet During the Programme What is a credit crunch? 1. Write down a definition for the following key terms: a) Credit b) Interest c) Liquidity d) Business Cycle 2. What are the four phases of the Business Cycle? 3. What does it mean when someone goes bankrupt? 4. What is a credit crunch? 5. Why were banks unwilling to lend to one another? What causes a credit crunch? 6. What is the prime market? 7. What is the sub-prime market? 8. What did the American banks do with the mortgage debts they had from sub-prime borrowers? 9. What effect did this have on the money markets? 5

6 10. What was the effect of this on businesses? 11. Name a business rescued by the UK Government 12. List two other global factors that affected the recession: The Losers 13. Which countries banking system collapsed? 14. Name a UK business that failed during the credit crunch: 15. How will the staff of that business be affected? 16. What do people cut back on during a recession? 17. Who are the biggest losers globally? The Winners 18. If the exchange rate falls what happens to the price of goods of a UK exporter? 19. Which types of business perform well during a recession? What Happens Next? 20. What happened to interest rates? 6

7 21. Why? 22. What happens when the supply of money is increased? 23. What types of projects will the Government invest in to try and stimulate demand? 7

8 Suggested Activities for After the Programme 1. The programme mentioned other financial disasters South Sea Bubble, The Wall Street crash in 1929 and Black Wednesday carry out research into these events and write a newspaper article about them. 2. The programme also mentioned the G20 summit what is the G20 and who are the members? 3. Carry out some research into the Business cycle and create a diagram illustrating the four stages. 4. Design a leaflet for small businesses giving them suggestions on how to make their business recession-proof 5. Before the video you carried out a brainstorm into the causes of the credit crunch compare your ideas then and now you have seen the film. 8

9 Suggested Student Responses What is a credit crunch? 1. Write down a definition for the following key terms: a) Credit: money borrowed, interest is charged b) Interest: a charge for borrowing/ a reward for saving c) Liquidity: the flow of money in an economy d) Business Cycle: the up and down movements in an economy 2. What are the 4 phases of the Business Cycle? Boom, recession, slump, recovery 3. What does it mean when someone goes bankrupt? They are unable to repay their debts 4. What is a credit crunch? Where the normal flow of credit ceases to exist 5. Why were banks unwilling to lend to one another? They didn t know which banks had bad debts (debts that were unlikely to be repaid) and didn t trust they would get their money back What causes a credit crunch? 6. What is the prime market? Borrowers who are likely to repay their debts 7. What is the sub-prime market? Borrowers who are unlikely to repay their debts 8. What did the American banks do with the mortgage debts they had from sub-prime borrowers? Sold them on as bonds to other banks 9. What effect did this have on the money markets? There was a loss of confidence in the money markets and the flow of money stopped (loss of liquidity) 10. What was the effect of this on businesses? They couldn t get any credit 11. Name a Business rescued by the UK Government Northern Rock 12. List 2 other global factors that affected the recession High oil prices and an increase in the cost of basic food stuffs (e.g. wheat) 9

10 The Losers 13. Which countries banking system collapsed? Iceland 14. Name a UK business that failed during the credit crunch Woolworths (or local examples) 15. How will the staff of that business be affected? They will lose their jobs and struggle to pay the mortgage etc 16. What do people cut back on during a recession? Luxury items e.g holidays, going out 17. Who are the biggest losers globally? Developing countries they will get less aid The Winners 18. If the exchange rate falls what happens to the price of goods of a UK exporter? It will make their goods cheaper 19. Which types of business perform well during a recession? People stay in rather than go out so take aways, DVD rentals, Debt management companies, discount stores What Happens Next? 20. What happened to interest rates? They were lowered 21. Why? To give people more disposable income and to encourage them to spend more 22. What happens when the supply of money is increased? The Central bank electronically tops up its accounts and uses this to buy debts from other banks to improve liquidity 23. What types of projects will the Government invest in to try and stimulate demand? Major building projects like roads to create jobs 10